Questionnnaire on investments 2008 GRI northwest
1. General questions on context of sound investment
climate
org_name category
GDF Suez networkuser
Essent networkuser
POWEO networkuser
Electricity Supply Board networkuser
GASELYS networkuser
Merrill Lynch Commodities (Europe) Limited networkuser
anonymous networkuser 1 networkuser
E.ON UK networkuser
Centrica Plc networkuser
GRTgaz TSO
N.V. Nederlandse Gasunie TSO
Vattenfall, Generation Nordic networkuser
On behalf of Shell Energy Europe networkuser
DONG Naturgas networkuser
GasTerra B.V. networkuser
National Grid TSO
Gaslink Independant System Operator Limited TSO
anonymous networkuser 2 networkuser
Eneco Energy Trade networkuser
DONG Energy Pipelines GmbH TSO
Swedegas AB TSO
This overview excludes several "paper"s submitted via email as
response to consultation. These papers shall be published separately
in parallel to this online-response overview.
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Questionnnaire on investments 2008 GRI northwest
1a. Questions to determine your interest in investment
1 What activities of the gas supply chain are you currently
involved in? In which countries do you operate?
GDF Suez Midstream
Capacity reservation (storage, transport, LNG terminalling) over whole
Europe
Essent distribution of gas, trade and sales
POWEO POWEO is a retailer in Gas & Power and operates CCGT and power
assets. POWEO is as well the main shareholder and the project leader
of Gaz de Normandie, an LNG Regasification Terminal located in
France. Poweo aims to be an active member of main continental
Europe Hubs and to book transit capacity.
Poweo is then a mid- and downstream company, with main activities in
France
Electricity Supply Board Purchase and Ship gas in the UK at the NBP and ship gas in the ROI,
we are an end user of the gas for power generation.
GASELYS Trading
France, Germany, UK, Netherlands, Belgium, Austria
Merrill Lynch Commodities (Europe) Limited Offshore optimisation, downstream gas marketing and trading, storage
investment
anonymous networkuser 1
E.ON UK Shipper, Supplier, Storage Operator and user
England, Wales and Scotland
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Questionnnaire on investments 2008 GRI northwest
Centrica Plc Centrica’s core gas business is the supply of energy to household and
business consumers. We supply gas to retail gas customers in Great
Britain (as British Gas), The Netherlands (as Oxxio) and in Belgium
(via our stake in SPE). Centrica is also active as a gas producer,
shipper and wholesale trader. We operate gas-fired power plants in
the UK and Belgium (again, via SPE) and hold a tolling agreement with
Intergen’s Rijnmond II power plant under development in The
Netherlands.
In addition to our activities in our home market of Great Britain,
Centrica’s existing European gas activities are concentrated in the
north west of Europe, in Belgium, the Netherlands and in Germany.
Within the EEA we also own businesses in Spain and Norway.
GRTgaz TSO
N.V. Nederlandse Gasunie N.V. Nederlandse Gasunie, owner and administrator of and investor in
gas infrastructure
Vattenfall, Generation Nordic Whole saler and end user.
Operation in Denmark and Germany
On behalf of Shell Energy Europe As a pan-European organization, Shell Energy Europe (SEE) covers
18 markets and sells gas to over 7000 customers, i.e. industrial and
commercial end-consumers, as well as regional & local distribution
companies. SEE oversees activities in the following countries covered
by the ERGEG GRI N/NW group: Belgium, Denmark, France,
Germany, Ireland, Netherlands, Norway, Sweden, UK
DONG Naturgas DONG Naturgas is member of the DONG Energy group of companies
engaged in the whole gas supply chain. The group is active in
Sweden, Denmark, Germany and The Netherlands
GasTerra B.V. Gas trade in Netherlands, UK, Germany, Belgium, France, Italy,
Switzerland
National Grid National Grid owns and operates the Gas Transmission System in
Great Britain and also owns four of the eight GB Gas Distribution
Networks.
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Questionnnaire on investments 2008 GRI northwest
Gaslink Independant System Operator Limited Operation, Maintenance and Development of the Gas Transportation
Network (Transmission and Distribution). Gaslink operates in the
Republic of Ireland.
anonymous networkuser 2
Eneco Energy Trade Wholesale, storage, retail
DONG Energy Pipelines GmbH DEP is a supraregional TSO and operates a pipeline in Germany.
Swedegas AB transmission
sweden
2 Is investment in new transmission capacity important to you
from a:
(n= 21)
Regional perpective 47.6%
National perspective 33.3%
Your individual business or organisation perspective 33.3%
A combination of these 76.2%
Please explain why
GDF Suez Enables a portfolio approach for midstream players
Essent lack of capacity is an issue at mainly interconnection points. but we
also experience major difficulties obtaining capacity in order to connect
a gas storage facility to the German grid, apparently due to lack of
available capacity.
POWEO Poweo is requesting more interconnections between the different
european gas markets, to create a more liquid and attractive gas
market.
Electricity Supply Board Installation of new CCGT's for portfolio upgrade.
GASELYS Target is to develop a paneuropean liquid unified market. One of the
basic condition to achieve this is to have an optimal and efficient
transmission capacity framework across regions and at national level
too.
Merrill Lynch Commodities (Europe) Limited Better market access will improve liquidity and therefore trading
opportunities both on a national and regional basis
anonymous networkuser 1
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E.ON UK E.ON has a functional business structure which operates accoss
borders. My interests are mainly about the impact of market rule
changes on these E.ON businesses that operate in GB. Clearly from a
gas perspective investment in infrastucture in the NW Region is an
important consideration for wholesale gas prices and security of
supply in GB. My perspective is mainly from the perspective of a user
of infrastructure rather than an investor in infrastructure although the
investment is fundamental to our sister businesses - E.ON Gas
transport and E.ON Gas Storage.
Centrica Plc Centrica needs access to transmission capacity to secure gas
supplies to meet the needs of our customers in Great Britain, the
Netherlands, Belgium and Germany as well as for our portfolio of gas-
fired power generation. Access to transmission is also essential for
our gas production and wholesale trading activities.
Cross-border transportation of gas within the North West European
region is an integral part of these activities and we have bid for new
transmission capacity in around half a dozen separate open season
(OS) processes over the last few years.
GRTgaz The most important is to invest according to the needs (market,
security of supply, environment, etc) and, as TSO, to be fairly paid for
it
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N.V. Nederlandse Gasunie
Gasunie is the first independent fully ownership unbundled cross
border gas infrastructure company in Europe. Gasunie participates
and invests in:
LNG (e.g. Gate terminal Rotterdam, the Netherlands)
•
Storage (e.g. Salt caverns Zuidwending, the Netherlands)
•
Interconnectors, e.g. Bacton-Balgzand-Line (BBL) and Nordstream
•
Gas
• transmission systems (e.g. Gas Transport Services (GTS),
Gasunie Deutschland Transport Services)
Gas
• Exchanges
At the moment the Gasunie infrastructure spans the area from Bacton
(UK) to Berlin (Germany)
Investment in new gas infrastructure is important for Gasunie from a
business perspective and from a national/regional perspective.
Gasunie’s business model is to offer gas infrastructure in a non-
discriminatory, transparent, objective, safe and efficient manner, and
at reasonable costs. Gasunie applies this business model in all its
activities. In these activities Gasunie is aggregating market demand
(for example by Open Seasons), on the basis of which efficient and
economically reasonable investments can be done.
The development of infrastructure is key for Europe to reach the goals
Vattenfall, Generation Nordic of its energy policy: securitythegas supply and thenot increased
Liquidity is not developed if of Ellund capacity is creation of a
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Questionnnaire on investments 2008 GRI northwest
On behalf of Shell Energy Europe · SEE business is based on local (national) sales activities, with strong
regional (cross border) interdependencies.
o Gas supply usually/in most cases is not/can not be fully covered by
indige-nous supplies, thus appropriate cross border interconnection
capacities are essential.
o The goal of 'one internal, competitive energy market can' can only be
achieved if an appropriate level of transmission capacity between
member states is available.
DONG Naturgas DONG Naturgas need capacity in the grids in the NWE region. Thus
alignment of the national regulatory frame- works is needed to ensure
investment incentives, which will subsequently provide sufficient and
efficient capacity - not least across national borders.
GasTerra B.V. For reaching more markets to trade gas.
National Grid National Grid are required under the terms of its licence to maintain
network capability up to a 1 in 20 peak winter day (i.e. the worst single
day conditions that would expect to be experienced only once in a 20
year period). It is essential from a national perspective this level of
transmission capability is maintained and that National Grid continue
to invest in its network to meet rising demand and changing supply
patterns. From a regional perspective the UK is becoming increasing
dependant upon gas importation. This comes from Norway, LNG and
importantly via interconnectors from Netherlands and Belgium. Co-
ordination of investments between National Grid and those TSOs, or
other parties, wishing to connect to its network is an essential element
of maintaining security of supply in Great Britain.
Gaslink Independant System Operator Limited Investment in new transmission capacity is key to ensuring a robust
infrastructure to meet market demand and to facilitate competition.
anonymous networkuser 2
Eneco Energy Trade Investments by Eneco sometimes have a supranational character, but
national issues remain equally important
DONG Energy Pipelines GmbH One of our entry/exit points is located at the German/Danish border.
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Questionnnaire on investments 2008 GRI northwest
Swedegas AB Total dependancy of danish supply which will decrease make opening
of new supply routes essential. The market also need a general
expansion from the present low level.
3 Have you been involved as an investor (owning, financing or
developing) in any gas, cross border infrastructure project or
infrastructure with an impact in regional gas trade?
(n= 21)
Yes 42.9%
No 57.1%
Are you considering participation in any such a project in the
future?
Essent yes, that would be possible
POWEO LNG Regas Terminal
Electricity Supply Board Our focus is installation of gas fired power stations, investment in the
gas infrastructure would be limited to getting sufficient connection to
the grid via connection agreements and enhanced pressure supply
agreements.
GASELYS No
Merrill Lynch Commodities (Europe) Limited No current plans
E.ON UK Sister companies within the E.ON group are clearly interested in
investing in all counties in the NW region.
Centrica Plc No
Vattenfall, Generation Nordic Not at the moment
On behalf of Shell Energy Europe The answers to this questionnaire are given on behalf of Shell Energy
Europe (SEE).
In the context of this consultation, we focus on our network-user role.
DONG Naturgas No
anonymous networkuser 2
4 In which countries have you invested or planned to invest?
(n= 14)
Belgium 14.3%
Denmark 0.0%
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Questionnnaire on investments 2008 GRI northwest
France 28.6%
Germany 50.0%
Great Britain 28.6%
Ireland 14.3%
Netherlands 42.9%
North-Ireland 7.1%
Sweden 7.1%
other 14.3%
5 As a network user (answer if applicable), have you been
involved in user commitment relating to such investment and (if
so) in which countries?
(n= 16; including 1 TSO with a Yes)
Yes 81.3%
No 18.8%
If so, in which countries?
(n= 13)
Belgium 30.8%
Denmark 7.7%
France 30.8%
Germany 53.8%
Great Britain 46.2%
Ireland 7.7%
Netherlands 69.2%
North-Ireland 0.0%
Sweden 7.7%
other 15.4%
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Questionnnaire on investments 2008 GRI northwest
1b. Questions to all stakeholders
6 Can an adequate level of interconnection between Member
States be achieved in view of future flows?
(n= 19)
Yes 89.5%
No 10.5%
Please explain.
Essent liberalised marktets require more capacity then available in the tailor
made grids existing from the situation before liberalisation.
POWEO This objective should only be partially achieved. In some areas, there
might be sufficient investments if a good coordination between
inverstors is realized but it seems unsufficient in main areas, in
particular due to operational reasons.
GASELYS In our view this is perfectly achievable since there is still a lack of
visibility of capacity availability in most of the member states
especially those which have transit services
Merrill Lynch Commodities (Europe) Limited Depends on the definition of adequate, but with proper incentives
there should be sufficient investment to increase the size of some
market areas. It may not be economic to gold plate the system to
provide a single market however.
anonymous networkuser 1 With suitable congestion management principles and adequate
incentives for TSOs or third parties to invest.
E.ON UK Yes. From the UK perspective this more often than not will depend on
merchant investments so 'light touch' regulation and TPA exemption
regimes are important so as not to act as an impediment to this.
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Questionnnaire on investments 2008 GRI northwest
Centrica Plc An adequate level of interconnection should be able to be achieved if
the conditions are right and TSOs maximise the use of existing
capacity. For example TSOs will need to consult in a regular open and
transparent way with stakeholders on future market needs, have
robust and non-discriminatory ways of offering new capacity (e.g. open
seasons), have improved coordination with other TSOs and regulatory
authorities and a regulatory regime that gives incentives for timely and
efficient development of the network. Regulators will also need to
ensure that TSOs comply with their obligations to develop and
maintain the network as set out in the current Gas Directive
2003/55/EC Article 8 and further obligations resulting from the
implementation of the 3rd Package.
Despite a number of imperfections in the recent OS processes, the
results clearly indicate that network users are prepared to make
substantial firm commitments that underpin major investment
decisions in favour of new capacity development.
GRTgaz yes, it is possible with :
- a stable, predictable and fair rate of return for these investments (to
garantee a minimal rate of return)
- binding commitments from the market, the regulators and/or the
policy makers (at national and European level) that cover the needs
for the market, security of supply, etc.
-stable and compatible legislative and regulatory frameworks
-cooperation between regulators and TSOs in order to achieve those
projects
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N.V. Nederlandse Gasunie Gasunie bases its investments on concrete market demand, the
market appetite of which is tested in open subscription processes.
Eventually investment decisions are taken on the basis of signed
contracts with customers for capacity. The level of interconnection is
adequate if market demand for capacity can be met.
Besides contracts with customers, a stable and predictable regulatory
regime needs to be in place. This will enable investors to earn a fair
return on their project and to be able to forecast long-term stable cash
flows (also to meet financiers’requirements). The project-specific risk-
reward balance also needs to be taken into account.
Finally, good coordination between Member states/Regulators and
TSOs is required.
. The involved regulators and governments should coordinate to make
regulatory frameworks compatible to enable timely investments for the
market.
On behalf of Shell Energy Europe From our point of view it's absolutely necessary (not an 'if', more a
'when') to achieve an adequate level of interconnection. Otherwise an
EU internal gas market will not be achieved.
Beside this, adequate interconnections are necessary
o to deal with increasing demand in Europe and resulting increase for
gas transits and
o to guarantee an appropriate level of supply security.
DONG Naturgas Most cross border IC points are sold out several years into the future.
GasTerra B.V. Yes, if there is a sound regional investment climate.
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Questionnnaire on investments 2008 GRI northwest
National Grid Uncertainty over future sources of gas supply to Europe, brought
about by a general decline in indigenous production, and the need to
ensure future security of supply against a variety of scenarios will
undoubtedly require more interconnection between member states
and more diversity in terms of sources of gas. This can be achieved
by co-ordinated planning both sides of the border coupled with long
term commitments from users, regulators or governments.
Gaslink Independant System Operator Limited This can be achieved providing the appropriate incentives are in place
to promote investments needed.
Eneco Energy Trade All barriers to sufficient interconnection can be removed.
Swedegas AB If investments are coordinated and tuned to expected market demand.
7 Is further investment in interconnection needed?
(n= 20)
Yes 95.0%
No 5.0%
Please explain.
GDF Suez To improve interconnexion between markets.
Essent see answer to question 6
GASELYS In any case certain points will have to be investigated and it is more
likely that investment will be needed
Merrill Lynch Commodities (Europe) Limited In the absence of any effective measures to deal with long term
contractual congestion there is a need for physical investment to
increase market efficiency for the benefit of consumers.
anonymous networkuser 1 Flow changes arising from different production sources, increased
security of supply requirements, optimisation of system, removal of
value for hoarding.
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Questionnnaire on investments 2008 GRI northwest
E.ON UK Additional investment in transit lines across Europe is required to
ensure peripheral areas such as GB can access flexible, diverse and
reliable sources of gas over the longer term. Further connections to
mainland Europe can be achieved if necessary by merchant
investment. Major impediments such as the need for gas processing
to UK specifications are likley to be required although the GB
regulator's obsession with complex auction arrangements to
demonstrate adequate user committments is a major impediment to
providing the necessary infrastructure.
Centrica Plc Congestion needs to be relieved in the Oude-Bunde-Emden area as
well as on the Dutch/Belgium border at Zelzate. Expansion work is
underway from existing open seasons but not for all networks
There appears to be both physical and contractual congestion to be
resolved at the Belgian/French border. We note that the delayed OS
process is now to be resumed, with firm capacity bids to be made
before the end of this year.
A further important example is the current EGT OS process in
Germany. it remains unclear, at the current time, to what extent and
on what timing EGT be able/willing to translate the very considerable
firm user commitment (in total 120 GWh/h) into actual new
transmission capacities.
GRTgaz Further investment (for security of supply, development of gas market,
environment issues, etc) have to be determined with network users,
operators of adjacent infrastructures, regulators and governements.
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Questionnnaire on investments 2008 GRI northwest
N.V. Nederlandse Gasunie The indigenous production in Europe is declining, while the demand
remains stable, or is slightly increasing. This leads to an additional
demand for gas coming form outside Europe. Gas is coming from
countries closer to the European Union, like Russia and Algeria, from
which piped gas is coming to Europe. In addition, gas also comes from
countries further away, from which gas will be brought o Europe in
liquefied from (LNG).
The additional gas flows create the need for additional gas
infrastructure, such as pipelines, interconnectors, LNG import facilities.
Given that gas will mainly come to Europe at baseload rates,
additional flexibility (in the form of storages) is needed to meet the
market demands.
Indeed, additional gas infrastructure is required to secure gas delivery
to the European market. Gasunie aims at playing an important role to
achieve this and is at the moment working to create new infrastructure
in the NW region.
On behalf of Shell Energy Europe E.g.: Germany/NL (Bunde, Oude, Waidhaus), France/Spain (Larrau),
Transits Germany to NW markets, Austria/Germany (e.g.
Burghausen), Norway/ Germany (Emden)
DONG Naturgas Coordinated Open Season's are needed - perhaps in combination with
new UIOLI rules.
GasTerra B.V. Yes, for example export transport capacity from the Netherlands to
market areas in Germany. More export capacity from the Netherlands
to the South.
National Grid Further investment in interconnection will almost certainly be required
for the reasons stated above.
Gaslink Independant System Operator Limited There are significant new sources of gas coming into the Irish network
over the coming years (e.g. indigineous gas fields, LNG terminals,
Storage Facilities), but we still believe that there will always be a need
for further investment in interconnection as economies grow and fuel
mixes change.
anonymous networkuser 2
Eneco Energy Trade Diversification of supply sources will create the need for a larger
European gas network
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Questionnnaire on investments 2008 GRI northwest
DONG Energy Pipelines GmbH Needed to meet the market demand and for security of supply across
the EU.
Swedegas AB See answer to 2. above.
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Questionnnaire on investments 2008 GRI northwest
1c. Questions for stakeholders with an experiennced
view toward investment (e.g. TSOs; network users are
very welcome to answer where qualified
1:
GDF Suez Permitting/nimby
Essent tariff regulation
POWEO Lack of coordination of operators/regulators
GASELYS lack of standardisation of products, balancing/allocation regime...
Merrill Lynch Commodities (Europe) Limited poor national market development which reduces investment
incentives
anonymous networkuser 1 TSOs can demand onerous commitments to underwrite their
investment, which can only be met by incumbents
E.ON UK Regulatory risk - will investors be able to earn adequate returns
Centrica Plc 1.Regulatory uncertainty over current and future tariff regimes
GRTgaz an unapropriate rate of return (too low, non predictable, etc)
N.V. Nederlandse Gasunie The patchwork of regulatory regimes is hindering Gasunie to make
timely cross border infrastructure investment and to meet market
demand for capacity.
On behalf of Shell Energy Europe Question should be primarily answered by TSOs
DONG Naturgas Unclear, unstable and unattractive regulatory framework for cross
border investments
GasTerra B.V. Legal uncertainty
National Grid Co-ordinated / compatable regulatory regimes
Gaslink Independant System Operator Limited Cost Recovery/Return On Investment
anonymous networkuser 2
Eneco Energy Trade Attempts to treat supply security as a national issue
DONG Energy Pipelines GmbH Uncertain legal framework
Swedegas AB Regulator predictability
2:
GDF Suez Increasing costs
Essent usage level uncertain in off peak hours
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 17 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
POWEO Too important expected rate of return on investment from TSO
compared to risk
Gaselys capacity hoarding by LT contracts, incumbents...
Merrill Lynch Commodities (Europe) Limited old fashioned investment criteria by regulators too afraid to support
spare system capacity
anonymous networkuser 1 Lack of forward transparency on tariffs mean that forward
commitments cannot be accurately determined.
E.ON UK Regimes that require unduly onerous user commitments e.g those in
UK
Centrica Plc 2.Lack of compliance with GGP on Open Seasons including a lack of
coordination of TSOs with Neighbouring Network Operators (NNOs)
GRTgaz no binding commitment (mainly to determine the needs)
N.V. Nederlandse Gasunie The lack of cooperation between regulators and governments (e.g. OS
2012) is hindering and postponing e.g. coordinating Open Season
projects.
DONG Naturgas Specific incentives for TSO's to invest in cross border facilities
National Grid Planning / permitting issues
Gaslink Independant System Operator Limited Regulatory Uncertainty
anonymous networkuser 2
Eneco Energy Trade Suboptimal focus on efficient network instead of efficient market
DONG Energy Pipelines GmbH different regulatory regimes in member states
Swedegas AB Political uncertainty
3:
GDF Suez LT Commitment of shippers
POWEO Links (financial, management) between TSO and commercial activities
in the same companies (Unbundling)
GASELYS lack of transparency, subsidisation
Merrill Lynch Commodities (Europe) Limited lack of incentives to allow competition for affiliated supply companies
anonymous networkuser 1 Absence of liquid secondary markets means that capacity holders
have little confidence in being able to liquidate a position.
E.ON UK Incompatibility between national enty-exit regime e.g. Between GB and
Ireland
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 18 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
Centrica Plc 3.Lack of coordination of national regulators and other authorities
e.g. planning authorities
GRTgaz inconsistency (legislative or regulatory) between both sides of the
interconnection
N.V. Nederlandse Gasunie On a national level in the Netherlands the regulatory framework is not
suitable for large infrastructural expansion projects. At the moment
GTS, the regulator and MEA are working on a sound framework that
will have the principles, as described by the TSOs in this document, in
place. On a national level in Germany the regulatory framework is also
not suitable and even unclear for large infrastructural projects. BNetzA
has recently decided that Gasunie Deutschland is not longer allowed
to set its transmission tariffs market based but has to follow cost and
incentive regulation. The rules for new investments currently foreseen
in this regulatory framework (e.g. return on equity, observance of
operational costs, interests on debts) are inadequate to provide a
sufficient return on investment to TSOs.
DONG Naturgas Too little cooperation between national regulators on cross border
issues
National Grid Obtaining sufficient User commitments. Proportional to the risk being
taken by the developer
Gaslink Independant System Operator Limited Regulatory Approvals
Eneco Energy Trade TSO's led by incentives of an affiliate supply complany
DONG Energy Pipelines GmbH uncertainty of RoI
Swedegas AB Fuel price developments
9 What should Member States do to achieve this (an adequate
level of interconnection between Member States)? What should
regulators do to achieve this?
GDF Suez Member States should concentrate on the leverage towards producers
and support EU midstream players to diverify sources and create more
level playing fields with producers.
Essent by determining the need for additional capacity, thoroughly investigate
the use of capacity at these interconnection points including
congestion managements systems. cooperation between regulators!
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 19 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
POWEO Improve coherence between cross-border TSOs. Develop secondary
market (mandatory with penalty if hoarding).
Develop hubs liquidity.
Clarify methodology on rate of return for investement (Asset base to
be precised, evolutive level related to financial rates, real assumption
on risk supported by operators)
GASELYS Regulator should incentivise TSOs to create IC combined (or bundled)
products. Firmness of capacity offered should be the same on each
side. Still fighting for having standadisation of operation, balancing and
allocation regime.
development of full capacity release policy, no longer capacity
hoarding and full data transparency
Merrill Lynch Commodities (Europe) Limited Member states should drop nationalist policies and develop
appropriate models of risk sharing for cross border investments to
better share costs.
Regulators should provide pro-investment models that properly
allocate risk between shippers, tsos and consumers which doesn't
happen now.
anonymous networkuser 1 Stronger obligations on TSOs to invest where there is demonstrated
demand.
Incentives on TSOs to optimise capacity availability (i.e. move away
from 100% capacity charges)
Opportunities for non-incumbents to by-pass the system where a lack
of investment is preventing competition.
Publication of investment plans.
Coordination of open seasons.
Greater transparency around tariff methodologies and tariff-setting.
E.ON UK Solve the returns issue for regulated interconnections or commit to a
genuine TPA exemption regime where the context permists (e.g.
between the UK and Mainland Europe).
Regulators must work together to ensure that national market rules are
compatibile with neigbouring country regime. This has proved to be a
problem in recent years with respect to the Irish Interconnector, where
Ireland is expected to come into line with GB exit arrangements.
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 20 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
Centrica Plc Regulatory powers - Member States firstly need to give national
regulators sufficient powers and resources to oversee effectively TSO
investment in interconnection and ensure that TSOs comply with their
network development obligations. In particular, it is critical to ensure
that the “user commitment” required from network users is sufficient to
encourage new investment, but not unduly onerous (as this could
deter potential shippers) nor structured in such a way as to restrict
future competition in gas supply.
Tariff regimes – For regulated infrastructure Member States should,
through their regulators, ensure that a stable tariff regime is in place
which reflects efficiently incurred costs, whilst at the same time
providing appropriate incentives for new investment. Rates of return
allowed on TSO investment should fairly reflect the level of risks
involved, taking into account the risks assumed by network users via
their user commitment.
Coordination of TSOs and regulatory authorities – Member States via
national regulators should ensure that the TSOs firstly comply with the
GGP Open Seasons. Member States should ensure that the national
regulatory authorities have the power to ensure TSOs cooperate on
and coordinate investments having a cross-border impact. It is equally
important that the regulatory process is coordinated between Member
States. User commitment regimes should be broadly consistent cross-
GRTgaz Member States and regulators have to create a sound investment
climate. It means :
- garantee on a minmimum rate of return for these investments,
- binding commitments from the market, the regulators and/or the
policy makers (at national and European level) that cover the needs
for the market, security of supply, etc.
-stable and compatible legislative and regulatory frameworks
-cooperation between regulators and TSOs in order to achieve those
projects
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 21 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
N.V. Nederlandse Gasunie Member states and regulators should see the importance of cross
border gas infrastructure as a key enabler for security of supply and
the realisation of a competitive regional/European gas wholesale
market.
There is insufficient attention for the specific position of independent
fully ownership unbundled (cross border) infrastructure companies.
Provided that these companies have no interest elsewhere in the gas
chain, they have to generate their income solely from their
infrastructure activities.
Regulation is a means to reach the goals of energy policy. (security of
supply and creating a competitive and transparent gas market);
regulation is no goal in itself. Therefore, regulators should not focus
too much on cost-efficiency as this might have a counterproductive
effect in the realisation of the energy policy goals, For an unbundled
company in a competitive infrastructure market (storages, LNG
terminal and transmission pipelines in competition) it is questionable if
detailed regulation is encouraging new gas infrastructure investment.
The regulatory framework is key to the development of the internal
market and the main regulatory focus is on the midstream sector,
notably on transmission networks. In Gasunie’s view, for the existing
infrastructure assets, the networks, the regulatory focus should be on
maximising the availability of the existing capacity to the market. The
regulatory framework should recognise in this respect that for
ownership unbundled infrastructure operators there is a natural
incentive to make as much capacity available as possible as this is
their sole source of income. Also the potential conflict of interest within
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 22 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
On behalf of Shell Energy Europe From a general perspective:
· The legal and regulatory framework should be fit for purpose and not
inadvertently distort the market.
· Member states and regulators should aim for a level playing field in
the European gas market. To that end they should focus on the full
and equal implementation of the Gas Directive in every country.
· In general, we believe the market would benefit from continued
harmonization of regulation at an appropriate level across Europe and
we would encourage the EU to investigate what the proper allocation
of regulatory powers between EU level and national regulators would
be.
· We would welcome more and better cooperation of regulation at EU
level and we support measures that are aimed at making crossborder
projects less complicated. Therefore a Regulatory Agency comparable
(but not identical, e.g. competencies should be aligned with
responsibilities) to the one proposed in the 3rd package could be a
useful institution.
· Cooperation of TSOs should be fostered. The planning for new
transmission infrastructure requires input from and consultation with all
other market participants. Specifically we would expect clear
processes for consultation and the resolution of disagreements. To
DONG Naturgas Focus specifically on cross border issues - and develop an appropriate
regulatory framework for applicable infrastructure assets.
GasTerra B.V. Long term predictability in order to attract long term investments
National Grid The investment model within Great Britain works reasonably well. It
relies upon the market signalling (and valuing) a requirement for new
capacity investment. This works reasonably well in ensuring that
investments in capacity are backed by a significant commitment from
users but it is foreseeable that in the future some investments may
require a different approach. For example – strategic interconnection
projects might fall into this category.
Gaslink Independant System Operator Limited MS's need to ensure that there are appropriate Regulatory
Arrangements in place and Regulators need to ensure that there are
appropriate Investment Incentives in place to guarantee adequate
levels of interconnection.
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 23 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
anonymous networkuser 2
Eneco Energy Trade -Ministers must explicitly state that gas supply security is not an
national but a European issue
-Unbundle TSO's
-Allow the network to be larger than technically necessary to create
competitive pressure on the commodity market
DONG Energy Pipelines GmbH Improve cooperation between member states.
Improve cooperation between regulators.
Not just focus on national but also on regional perspective.
Develop adequate RoI principles to attract investors.
Swedegas AB Member States: cooperate
Regulators: Provide predictability
Pagina TSOs; 83
1c. Questions for stakeholders with an experiennced view toward investment (e.g. 24 van network users are very welcome to answer where qualified
Questionnnaire on investments 2008 GRI northwest
1d. Specific questions for Network Users
10 Is it sufficient to have a regulatory framework that encourages
investment in each individual MS?
(n= 20)
Yes 20.0%
No 80.0%
11a What are your views on the investment climate in the region:
Is there sufficient clarity on the regulatory framework?
(n= 19)
Yes 21.1%
No 78.9%
11b Does the regulatory framework provide the correct
incentives for cross-border investment?
(n= 18)
Yes 16.7%
No 83.3%
11c If you answered "no" to 11a and/or 11b, please explain what
is missing in the investment climate (please try to answer this
question by explaining how this impacts your organisation and to
which Member States or parts of the region your answer relates
GDF Suez Extremely complicated rules, different regulatory frameworks in
different countries.
POWEO Incentives as to be linked to the level of risk taken by ths investors. No
premium should be granted without additional risk.
Level of IRR should be defined in accordance with Euribor + or
equivalent
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GASELYS In general responsibility of the regulators is not clear and investments
projects took far too long to become live when they do. Now what we
see is future investments are mostly based on OS which are very
difficult to coordinate, which favour mostly (very)long term bookings
where market visibility is very uncertain. This means that investment
plans are still not market orientated and, the actual need for additional
capacity at certain IC points (ie Oude, Emden, Blaregnies,
Oberkappel...)is probably not justified. By the mean of coordinated OS,
which are very difficult and long to put in place, based on the
assumption that people have a clear view of their capacity
requirements in the next 25 years, TSOs can delay easily any decision
making process.
Merrill Lynch Commodities (Europe) Limited No clear investment models so often shippers are required to commit
to capacity without knowing the price or likelihood of delivery. The
current arrangements only suit large producer/suppliers.
The open season approach only encourages periodic investment from
one level of congestion to the next.
anonymous networkuser 1 Obligations and incentives for TSOs to take risks, rather than invest
only when a project is fully underwritten by long term capacity
commitments.
E.ON UK Certainty about adequate regulated returns where if regulated and
genuine 'light touch' regulation where there is merchant investment in
interconnectors
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Centrica Plc Member States are still in the process of properly implementing
regulated tariff regimes that reflect efficiently incurred costs. As a
result there is a lack of clarity on the overall tariff regime as well as the
incentives that may be given for new investment.
This creates uncertainty for us as a network user about the overall
cost of the capacity we are committing to pay for in the future. It also
creates uncertainty for the TSO making the investment and frequently
results in the open season process being delayed. This issue has
delayed TSO investment in the Netherlands and Belgium, and had a
knock on effect in France.
Moreover, the cross-border co-ordination of OS processes has been
less than satisfactory to date – e.g. as regards their timing, procedural
details, consistency of inter-operability conditions (such as gas quality
specifications), user commitment regimes, capacity allocation rules
and regulatory conditions precedent.
It is also important to consider the link between OS processes and
other key aspects of the transmission capacity regime. We consider
that many TSOs are not currently facing the correct regulatory
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N.V. Nederlandse Gasunie It is not solely the national regulatory framework but it is the overall
European energy policy and the cooperation between the involved
authorities that should enable and encourage timely and economically
reasonable gas infrastructure investments.
A sound national investment climate is only the beginning, a
prerequisite. Additional regional cooperation between authorities is
required to ensure a sound investment climate on both sides of the
border so timely cross border investments will meet regional market
demand for additional capacity.
As described above, we doubt whether the regulatory regime always
focuses on the right elements. Regulatory regimes should support
developments that lead to the realisation of the goals of the energy
policy and in certain instances we see that, on the contrary, the
regulatory framework is a hindering factor in the development of new
infrastructure.
At the moment in the Netherlands Gas Transport Services, the NRA
and the MEA are working to improve the national investment climate.
An investment policy (Beleidsregel) was recently published by the
MEA. Gasunie is confident that the contents of the Beleidsregel will be
accommodated in all future regulatory frameworks. Gasunie fully
acknowledges the principles written by the TSO and strongly believes
that investment is only possible if these investment principles are in
On behalf of Shell Energy Europe From our perspective, we have some sympathy for TSO/investing
parties argu-ments complaining about missing clarity of regulatory
framework.
Concerning 'the right incentives'– we doubt that the current systems
offer ap-propriate (commercial) incentives or legal requirements for an
unbundled TSO to invest in cross-border interconnections. There are
almost no legal obligations to align investments with neighboring TSOs
nor attractive commercial incentives to foster lengthy discussions with
regulators and other TSOs.
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The missing clarity - hereunder the limited length of regulatory periods
(ref. the German Incentive Regulation) provide too great uncertainty
for passive investors, who are likely to invest their funds outside the
gas infrastructure business.
GasTerra B.V. Regulatory framework is not stable enough and should be improved
such that it is more based on economics (business economics as well
as benefits for society).
Open season only is not enough, an overall (NW-European) grid
scheduling is also needed.
National Grid One of the difficulties with answering this question is that there is
currently no concept of a regional investment climate. Instead there is
a patchwork of different investment regimes which in many cases
appear not to be particularly compatible. This fact coupled with TSOs
and indeed NRAs having different priorities and/or objectives leads to
potential difficulties in obtaining the clarity of risk required before
investments can be made.
Where the regulatory frameworks in MS are functioning well and are
comparable / compatible each side of the border with neighbouring
states then this should be sufficient to enable cross border
connections.
anonymous networkuser 2
DONG Energy Pipelines GmbH The current German regulatory framework does not create a sound
investment climate:
Equity yield rate before tax too low
Incentive Regulation Ordinance creates uncertainties for TSOs and
investors
Framework for investment budgets unclear.
Depreciation periods too long.
Swedegas AB No coordination of regulatory regimes and too regide regulatory
systems not designed to handle new major investments
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12 What do you consider reasons for investments? Please list
and explain.
GDF Suez Create new routes for gas flow. Remove physical congestions.
Encourage market area mergers.
Essent market demand.
additional flows from for example LNG, storage.
GASELYS With the past 10 years experience in the region, TSOs know exactly
where investment should be made to improve transit capacity and
flows liquidity
Merrill Lynch Commodities (Europe) Limited Investments are required to get the gas to market, either to trade or to
supply consumers. Congested networks provide no incentive to
compete for gas sales.
anonymous networkuser 1 A favourable risk/return ratio.
E.ON UK With respect to UK to mainland Europe interrconnects this was driven
by the need initially to access new export markets then as a new
supply route to the GB. Also use driven by arbitrage opportunitities.
With the lack of real storage obligations on suppliers in GB investment
in storage depends on differential in wholesale prices across the year.
Flatten prices across the year and the investment case becomes very
difficult. The difference in the storage regimes between the UK and
the rest of Europe thus clearly influences the investment climate within
the UK. Less emphasis in terms of storage obligations and more
emphasis on the market driving use and investment in storage
facilitities is required. Ultimately if there is proper regulated TPA
access to the grid and it should be possible for many storage facilities
to compete amongst themselves and with LNG and customer
interruption in emerging peak gas flexibility marketss.
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Centrica Plc Investment in capacity is needed to remove existing congestion,
accommodate new flows and allow for gas to flow on an economic
basis to where it is needed most.
Other investment may be needed, e.g. to accommodate changing gas
qualities and reduce the number of balancing zones (e.g. within
France, as from 1.1.2009).
GRTgaz Market needs, security of supply, environment issues, etc
N.V. Nederlandse Gasunie The most important reason for investment for Gasunie is when there is
enough market demand for capacity that can be translated into a
sound and economically reasonable investment project. .
Subsidiaries of Gasunie also have legal/public tasks to invest in
specific gas infrastructure (e.g. covering peek demand in the
Netherlands).
On behalf of Shell Energy Europe · Legal requirements: safety, security of supply and adequacy of grid
(incl. maintenance)
· Regulatory requirements as outlined in respective
directives/laws/regulations
· Revenue growth (by geographic expansion, increase of transport
volume) or efficiency increase (cost reduction) aspirations.
DONG Naturgas A possibility for the TSO to earn a fair return comparable to business
opportunities for paasive investors in other sectors.
GasTerra B.V. Business development
National Grid As a TSO the reasons for investments are;
To comply with any licence or other legal obligation to maintain or
enhance capability in the network;
To meet the requirements of our customers, i.e. satisfy the demands
of the market; and,
To provide a suitable rate of return to our share holders.
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Gaslink Independant System Operator Limited Security of Supply, Supply and Demand Forecast, Market Growth,
Operating Environment Changes (e.g. Single Gas Market Ireland),
Technical Requirements, Competition Rules etc.
anonymous networkuser 2
DONG Energy Pipelines GmbH Security of supply in EU
To meet the market demand
Sound investment climate:
shorter periods of depreciation
Swedegas AB 1. Market demand
2. Reasonable return (in relation to alternatives)
3. Predictability about risks
13a Do you observe a link between efficient congestion
management and investment needs?
(n= 19)
Yes 89.5%
No 10.5%
13b What is needed to assess a reasonable capacity demand for
which TSOs must invest?
GDF Suez Requests to regulator with a study
Essent open season are a good method provided that regulators have powers
to intervene if needed.
POWEO TSOs need shippers commitments supporting the investments. These
commitments will be a consequence of better coordination between
stakeholders and efficient market consultation.
A transparent regulatory framework defining fair RRI for TSO is
needed as well.
GASELYS To know in a full transparent manner the actual flow at the IC,
especially the "hoarding situation" of the LT booked capacity and the
actual level of interruptibility. It is also to be considered the level of
uncompatibility of the capacity products offered either side of the IC,
as well as for the associated services, ie balancing, measuring,
allocation, firmness...
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Merrill Lynch Commodities (Europe) Limited TSOs should have a proper economic investment test then use a
variety of information sources to assess demand. This includes
surveys, and primary allocation approaches such as auctions with firm
bids. Open seasons should only be used for very uncertain
investment requirements such as new large infrastructure.
anonymous networkuser 1 Regional planning
E.ON UK The efficiency of wholesale markets depends on building some
flexibility into systems so there is greater scope for gas to be brought
to market under a wider range of supply scenarios. Efficient wholesale
markets offer more value to customers in terms of lower prices that
more than offset small increases in trnsportation charges caused by
slightly 'over-investing' in infrastructure.
There is value in user commitment provided by long term contracts
however there is a place for central planning for many key investments
backed by guaranteeed retuns for TSOs. Regulators must not be
allowed to abdocate their responsibilities by pretending that user
commitments can replace adequate regulatory oversight of
investments (exclusing those of coursethose made on a merchant
basis where such oversight is not required).
Also some capacity needs tobe help back and made available on a
short term basis to support new entry to the market.
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Centrica Plc TSOs must firstly comply with the GGP on Open Seasons. In due
course we also look forward to implementation of the elements of the
3rd Energy Package that should help address this issue.
As a priority, TSOs must also comply fully with all their existing
transparency requirements, so that shippers can start to develop a
better understanding of how the network is being used and where
additional capacity may be needed. We support the EFET wish-list of
additional information that shippers need for effective access to the
system. In the light of the recent report from Ofgem on the NW GRI
Transparency work stream, we welcome the progress that has been
made to date and look forward to a more rigorous application by TSOs
and regulators of the “less than 3 shippers” process laid out in EU
Regulation 1775/2005.
TSOs must develop regular and rolling processes for consulting with
shippers on future demand and investment. Annual Winter Outlook
and 10-year Investment Plans are an important part of this process.
Additional processes are then needed to assess formally the demand
for new investment e.g. open seasons and auctions.
We welcome the processes that have been initiated by GTE to
produce pan-European winter outlooks and investment plans, but (as
GRTgaz Binding commitments from a combination of the market, the regulators
and the government
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N.V. Nederlandse Gasunie Gasunie has efficient congestion management systems in place in all
infrastructure access conditions. As a full ownership unbundled
infrastructure company the only possibility to generate income for
Gasunie is to market capacity in the most efficient way. Additional
detailed regulation is not required for Gasunie to encourage efficient
congestion management.
Subsidiaries of Gasunie in practice encourage efficient congestion
management by facilitating primary and secondary markets, offering
interruptible and day ahead capacity at all important cross border
points.
In case, there is still market demand, after applying these CAM and
CMPs, the additional market demand will be aggregated and
translated into a new economically reasonable infrastructure project
which will be realised when the investment climate is sufficient.
Gasunie supports all the principles described by the TSOs in this
questionnaire and agree with the corresponding justification.
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On behalf of Shell Energy Europe · As mentioned in the side-letter to the questionnaire, the TSOs have
the obligations to expand the transmission system to meet market
demand (Directive 2003/55/EC and Regulation 1775/2005). One of the
most obvious indicators for likely congestions is the level of available
firm capacity. If there is a lack of spare capacity, this should be seen
as a strong indicator for necessary investments. Beside that, the huge
interest in additional capacity is/has been documented in several Open
Season processes (e.g NL GTS expansion, Germany: EGT Open
Season)
· We would recommend regular open season processes, which would
have to be coordinated between TSOs in adjacent grids. The process
and time-interval between the open seasons should be aligned. The
results of these processes could either be used to directly trigger
investments activities of TSOs. Alternatively, the regulators could use
the information to develop a regional list of expansion investments,
which would have to be implemented by TSOs.
· In addition, we would encourage regulators not to exclude 'creative'
ideas for capacity generation. E.g. flow commitments, nomination
netting by TSOs, statistically firm capacities. Of course, regulators
should monitor and take action to inhibit and penalize abusive
behavior.
DONG Naturgas Transparency,joint Open Seasons at cross border points - and Open
Seasons in the adjourning national grids.
GasTerra B.V. If there is demand for capacity, it should be made available either by
efficient congestion management (where, of course, existing contracts
have to be respected) or by new investments.
Market (shippers) demand and overall grid schedule based on benefits
for society are needed to assess a reasonable capacity demand as a
basis for investments.
National Grid Clearly congestion may be taken as a signal that additional capacity is
required. However it is important that effective use it or lose it
mechanisms along with a range of capacity products are operating
before this conclusion can be reached. It is also necessary that any
capacity investment, which will inevitably be a long term investment, is
backed by sufficient commitments from users and/or the NRA.
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Gaslink Independant System Operator Limited Security of Supply considerations should ensure that supply is
sufficiently higher than demand to ensure that peak demand and
abnormal conditions can be handled by the infrastructure. If modeling
show this not to be the case, then investment may be required.
anonymous networkuser 2 There is mutual exchange of information relating to future capacity
demand needed between relevant parties such as TSO's and
companies which are involved in large infrastructure projects such as
LNG or storage facilities.
DONG Energy Pipelines GmbH Open season.
Shippers requests.
Swedegas AB Market research, i.e. open season procedures.
14 How would you describe the applicable regulatory regime for
the investment in the countries of which you have experience
(e.g. mandated investment, guaranteed rate or return, incentive
regulation, merchant investment)?
GDF Suez Guaranteed rate of return, mandated investment, merchant investment
Essent Netherlands, all ok.
Germany, too much uncertainty for market parties but TSO as well.
Example current open season EGT.
Merrill Lynch Commodities (Europe) Limited Dutch regime is confused and uncertain.
German regime has poor processes with little regulatory oversight.
UK system works but is complex, and planning is used as an excuse
for slow delivery.
Belgium system never seems to deliver outcomes on time.
anonymous networkuser 1 UK - good
Germany - unclear
NL - unclear
France - unclear
Belgium - unclear
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E.ON UK NGG - guaranteed rate of retun through a 5 year price control with
incentive regime around the edges. The incentive regime is overly
complex and opaque and it is hard to work out whether the
mechanism esigned for investment in the grid offer good value to
customers.
The TPA exemption regime in GB has worked extremely well to date
but there are signs that there is a new mood for intervention by the
regulator which could undermine investor confidence that adequate
reurns will be earned for new projects. The implications of greater
emphasis on regulated access for LNG, interconnectors and storage
in the 3rd package needs to be considered very carefully in the GB
context.
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Centrica Plc National Grid Gas – incentive regulation based on a Regulatory Asset
Base, an allowed rate of return on investment and a 5 year allowed
revenue capping formula of the form “RPI – X%”. Capacity auctions
apply at NTS Entry within this overall regulatory framework and new
investment is “signalled” within the annual auctions for long term
systems entry capacity (LTSEC).
GTS – pending regulatory and legislative approval, incentive
regulation based around an allowed rate of return for new
investment.
Fluxys – pending settlement of legal action, guaranteed rate of return
for new investment.
GRT-Gaz – the system is currently in transition, but appears to be
moving towards incentive regulation of transmission opex combined
with a guaranteed rate of return on new investment (which includes a
3% premium to the return allowed on existing assets).
EON Gastransport – also in transition, but seems likely to be a form of
multi-annual incentive regulation with an allowed rate of return on new
investment.
IUK and BBL (initial forward flow) are exempt from regulated TPA.
Incremental forward flow capacity in BBL is formally regulated but the
basis for that regulation is rather unclear.
We would encourage ERGEG to review the various regimes and learn
from best practice.
GRTgaz In France, the regulation gives a higher rate of return for investments
which develop the gas market. It is an incentive regulation if the rates
of return are predictable and high enough.
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N.V. Nederlandse Gasunie For the transmission system in the Netherlands operated by Gas
Transport Services a cost based tariff regulation applies. For the
transmission system in Germany operated by Gasunie Deutschland
Transport Services two principle ways of tariffication are foreseen in
the law. TSOs who are under existing or potential competition can set
their tariffs market based. All other TSOs have to apply cost based
tariffs which will additionally from 2009/2010 onwards follow an
incentive based regulation. BNetzA has recently decided that Gasunie
Deutschland has to apply cost based tariffs.
For the BBL interconnector an article 22 exemption has been granted
for the regulated terms and conditions, and the same applies to Gate
terminal. For storage projects, in general the nTPA regime applies
(provided that no party with a dominant position on the market
develops the project, in which case additional requirements have to be
applied).
On behalf of Shell Energy Europe For the sake of efficiency, regulators of N/NW countries should answer
this question. Only if market participants would disagree with the
respective selection, further country specific evaluation would be
useful.
Nevertheless, one should ask the questions: Why do we need such a
diverse selection of different regimes?
DONG Naturgas Unclear, unstable and unattrative
GasTerra B.V. Regulatory regime for investments is pending
National Grid The GB regime is one in which National Grid, as TSO, is incentivised
to make efficient investments in order to meet the requirements of
users who have committed to buying capacity via a long term auction
process. In addition there is a mandatory requirement to ensure that
system capability is maintained at 1 in 20 peak day demand levels.
Gaslink Independant System Operator Limited The Irish Regulatory Regime could be described as incentive
Regulation with 5 year price controls and annual allowances set by the
Regulator.
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DONG Energy Pipelines GmbH Germany:
i. a.: Equity yield rate to low. No interest on assets under construction
considered - negative for investment decision. Currently no predictable
framework for investment budget application.
Swedegas AB Regime: ex ante and no guidance on acceptable return mekes
investments impossible.
Regulator: Low general competence, lack of market understanding
and bureaucracy makes dialouge very difficult.
15 Which elements of the regulatory regime made/would have
made the investment more attractive?
GDF Suez Incentive tariffs for long term subscription
Essent guaranteed rate of return.
Merrill Lynch Commodities (Europe) Limited Pre-agreed investment models between TSOs and regulators before
capacity sales.
Market based allocation with flexibility to meet shippers needs.
anonymous networkuser 1 Guaranteed Article 22 exemption for non-incumbent investment.
E.ON UK Burden of proof for rejecting applications for TPA exemptions to be
placed on the relevant regulatory authorities.
In GB allow investments to be made ahead of user commitments and
that allowed revenues should not be disallowed in the absence of user
commitments where there is a clear need for such investment (e.g.
critical investment re Easington capacity in GB). The fear of having
revenue disallowed because of so called lack of user commitments
inevitably makes TSOs conservative in making investment decsions.
This could make the difference between "just in time" investments and
"just too late investments" which may turn out to adversely affect to
security of supply.
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Centrica Plc This question is primarily for TSOs. We support appropriate
incentives for TSOs to invest in new infrastructure e.g. an appropriate
rate of retun, taking into account both the need for investment
efficiency and the level of risk passed to network users via their “user
commitment”.
GRTgaz Higher rate of return
Garantee of stability (or predictability) of regulatory conditions
Binding commitments from shippers and/or regulators, states, etc
N.V. Nederlandse Gasunie With respect to the timely development of new infrastructure the policy
and regulatory framework should support new investments. In this
regard, a better balance between politics (setting of goals and targets)
and regulation (technical, independent) would enhance both the
effectiveness of policies and the quality of regulation. Ownership
unbundled infrastructure operators have a natural incentive to invest
on the basis of a business case that views the investment purely on its
own merits. Yet, the level of allowed regulated return on the
investments in many cases prevents taking an investment decision
unless the majority of the risk is carried by the shippers through long-
term commitments. With the costs of transmission typically in the
range of 2 to 4% of the end-user bill, allowing returns more
commensurate with risks could improve the investment climate at only
a very marginal effect on the end-user bill. After all, the cost to end
consumers is mainly determined by the price of the commodity. By
removing infrastructure bottlenecks, and even allowing a slight over-
dimensioning of the infrastructure, the increased opportunity for trade
On behalf of Shell Energy Europe Question should be primarily answered by TSOs. In general, all
elements, which are moving the benefit/risk coordinate into a more
favorable position.
DONG Naturgas Joint (cross border) timing of the planning process is essential for
taking multi-company decisions. The national frameworks for investors
to obtain technical and environmental permits must be aligned. The
national thresholds for gas quality, pressure and temperature need to
be aligned. (Gas Codes)
GasTerra B.V. Transparent, long lasting integrated regime.
Gaslink Independant System Operator Limited A Guaranteed Rate of Return over the full life of projects would be
more attractive.
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DONG Energy Pipelines GmbH - stable legal framework
- adequate RoI
- current market equity yield rates
Swedegas AB Predictability and fair return.
16 Which elements of the regulatory regime made/would have
made the investment less attractive?
GDF Suez -
Essent in Germany the mid-long term uncertainty on rate of return and tariffs.
re-evaluation after 5-10 years is creating much uncertainty for TSO's.
Merrill Lynch Commodities (Europe) Limited Trying to keep tariffs at the same level for all time regardless of the
marginal cost of additional investment.
Lack of flexibility in contract terms.
anonymous networkuser 1 For TSOs to answer.
Centrica Plc This question is primarily for TSOs
GRTgaz Adverse changes on investment parameters concerning investment
decisions already taken
N.V. Nederlandse Gasunie More detailed regulation will only hinder additional investments for
Gasunie instead of encouraging them. Thereby Gasunie believes the
lack of good coordination between regulators and Member states
and/or the lack of an investment climate that stimulates new
investments will make investments in new gas infrastructure less
attractive.
On behalf of Shell Energy Europe Question should be primarily answered by TSOs. In general, all
elements, which are moving the benefit/risk coordinate into a less
favorable position.
DONG Naturgas Incentive Regulation as approved in Germany.
GasTerra B.V. Regulatory regime still pending.
Gaslink Independant System Operator Limited Regulator uncertainty and the possibility of Regulator Opportunism
(post completion of a project)
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DONG Energy Pipelines GmbH - instable legal framework
- different regulatory approaches in MS
- no consideration of regional aspects of investments in new
infrastructure.
Lack of alignment between national regulators with regard to
implementation processes.
Swedegas AB Lack of predictability and/or too low return in relation to alternative
investments with comparable risks.
17 How and who should intervene if e.g. two or more adjacent
TSOs involved in a trans-national pipeline fail to cooperate due to
the circumstances in one or more of the involved countries?
GDF Suez European commission as guarant of the needed means for market
comptetition.
Essent regulator in first instance, but we acknowledge that it is also often a
political issue, so MS could play a role as well.
POWEO ERGEG/ACER & GTE+/EC as mediators and regulators to force TSOs
to share opinions.
GASELYS of course regulatory bodies of each country involved, assuming that
they can work efficiently and not under the pressure of governments or
TSOs
Merrill Lynch Commodities (Europe) Limited National regulators should sign cooperation agreements noting
appropriate courses of action.
anonymous networkuser 1 Relevant regulatory authorities, CEER/ERGEG, European
Commission
Centrica Plc In the first instance, National Regulators should have the power to
require TSOs to cooperate and to take action to intervene e.g. in the
case of interoperability issues. National regulatory authorities must
ensure that if the TSO is part of a vertically integrated company that it
is not seeking to delay investment to protect the market of any related
supply undertaking.
In the context of the 3rd Energy Package, creation of ACER should act
as a further guarantee of such cooperation.
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N.V. Nederlandse Gasunie It’s not that TSOs are failing to cooperate but it is the lack of a sound
investment climate with the right incentives and the incompatibility of
neighbouring regulatory frameworks that hamper timely cross border
investment. See for example the postponement of Open Season 2012
of GTS because of the lack of a sound investment climate in the
countries of neighbouring network operators. On the website of BBL
Company it becomes clear that the interruptible reverse flow services
have been postponed due to the fact that Ofgem has not yet agreed
on the tariff
On behalf of Shell Energy Europe See above. We would prefer a level playing field with comparable
implementation of 2nd directive. From our perspective, there just
should not exist an excuse like 'circumstances in one or more
countries'.
At least, regulators and governments should focus on removing these
circumstances before thinking about new regulatory initiatives.
DONG Naturgas ACER
GasTerra B.V. Benefits for society at both sides of the interconnection point should be
the basis on which governments should take action.
Gaslink Independant System Operator Limited The NRA's and the Governments of the involved countries should
discuss the issues and propose some solutions in conjunction with the
TSO's involved.
anonymous networkuser 2
DONG Energy Pipelines GmbH ACER
Regulators as moderators.
Swedegas AB An european Authority, according to the proposed 3rd energy market
directive.
18 Mismatches in available capacity on both sides of an
interconnection point may be considerable and hamper market
access. Solving this problem is not easy since e.g., investments
(costs) in one network may lead to benefits in another network
(e.g. upstr
GDF Suez Create crossborder compensation, and support crossborder M&A (eg
Gasunie).b
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Questionnnaire on investments 2008 GRI northwest
Essent better and obligatory cooperation between TSO's.
POWEO Cross border capacities should be considered as a whole, as a project
with 50/50 cost/benefits for both TSOs.
GASELYS By harmonisation of the balancing, allocation rules and offering
combined firm/interruptible capacity products, even not for all the
products at the beginning would be ok
Merrill Lynch Commodities (Europe) Limited Solutions will not be perfect, but an attempt should be made to assess
the overall benefits and maybe find a way to have inter tso
compensation in the short term.
In the long term a move toward regional market/networks should
reduce such conflicts.
anonymous networkuser 1 Some form of transfer pricing may be considered. Capacity rights
definitions may also be relevant.
E.ON UK We would like to emphaise the importance of locational entry exit
charges to target cost appropriately. Ultimately there might have to
be some pooling of revenues and reallocation monies between TSOs.
Centrica Plc There are a number of elements to this, including:
Cross-border co-ordination of investment incentives
Effective measures to combat contractual congestion, on one side of
the border or another
OS co-ordination
A sufficient (but not unduly onerous) level of user commitment on the
part of cross-border shippers to ensure that retail customers do not
shoulder an undue portion of any investment cost/risk
Mismatches in definitions, including of capacity
GRTgaz Generally speaking, global optimisation is a good thing for the
community. It has to be encouraged by the regulatory regimes and/or
benefits have to be shared by the investors.
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N.V. Nederlandse Gasunie Gas Transmission Infrastructure (LNG, storage and transmission)
should be regarded in an integral way because it is the integral gas
infrastructure that provides the overall security of supply. This view is
not compatible with regulation that is focussed primarily on the
transmission costs for the individual national end consumer
(approximately 3 % of the end-consumer price)
By removing infrastructure bottlenecks, and even allowing a slight over-
dimensioning of the infrastructure (i.e. building more infrastructure
than long term committed by users), the increased opportunity for
trade and arbitrage will likely more than compensate for the slight
additional cost for use of the infrastructure, thereby in effect
significantly lowering the cost to end consumers.
On behalf of Shell Energy Europe From our point of view, most of these problems could be sorted out if a
coordinated approach between adjacent TSOs and respective
regulators would be achieved.
DONG Naturgas Should be solved on a project-to-project basis with ACER as an
intermediate. Closer TSO cooperation
GasTerra B.V. Benefits for society at both sides of the interconnection point should be
the basis on which governments should take action.
National Grid Circumstances such as that described can be alleviated through co-
operation and agreements between TSOs e.g. to provide an enhanced
pressure service. It is however essential that NRAs are involved on
both sides of the border to agree the provision of the service and that
any proposed cost targeting is appropriate.
Gaslink Independant System Operator Limited This is all related to the Sound Investment Climate being discussed,
and should be considered not only on a national basis, but certainly on
a regional basis. Regional Regulators and Government bodies need
to cooperate and develop seme overarching principles for investments
across all member states. . . consistency is key.
DONG Energy Pipelines GmbH Cooperation between all active parties.
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Swedegas AB This type of optimization require:
1.TSO cooperation to make assure the most efficient investment to
solve the problem
2. Equal regulatory provisions on both sides of the border
3. A compensation system, wich could be administred by the planned
european Authority
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Questionnnaire on investments 2008 GRI northwest
2. Detailed questions to TSO principles per principle
19 Do you feel that you have adequate access to capacity?
(n= 15)
Yes 13.3%
No 86.7%
If not, please explain?
GDF Suez Entry-exit with no free and/or firm available capacity to book.
Essent in general yes, but some interconnection points are difficult to access.
and as explained before the issue of getting capacity in Germany.
POWEO Until now, secondary market of capacity is very poor, mainly due to
capacity hoarding or lack of rule to incent incumbent to sell their
rights.
Any current development will be available for the market on the long
run (2012+). Rules have to be defined to have access to a non-
discriminatory market.
GASELYS There is still a lack of clarity on the firmness of the capacity at most of
the points, ie our experience shows that interruption at the most
important IC points are very scarce. Also risk is very difficult to assess
because products are different from one TSO to the other and even
uncompatible. balancing, allocation... regimes are very different too.
Booking methods are also too far from each other. All these points
prevent right access to capacity. There is still too much confidentiality
on the LT contract hoarded capacity
Merrill Lynch Commodities (Europe) Limited In practice we know where capacity is not available so we don't look in
those areas.
Where it is available but scarce the price often reduces the incentive
to complete deals, even if the capacity on offer is not going to be used
by the primary holder.
anonymous networkuser 1 Inadequate access to FIRM capacity; often there is access to
interruptible.
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Questionnnaire on investments 2008 GRI northwest
Centrica Plc The majority of existing transmission capacity in NW Continental
Europe is reserved under long-term contracts. Many routes are highly
congested (physically and/or contractually) and it is very difficult for
new and recent market entrants to get access to existing gas
transmission capacity, either from the TSO or on the very limited
secondary market.
Vattenfall, Generation Nordic Working with short term contracts only, there are normally not capacity
available, even with a 12 months palning period.
On behalf of Shell Energy Europe The answer very much depends on the interpretation of 'adequate'.
Of course we have access to the capacity necessary to run the
existing business. Nevertheless, we do not see it as 'adequate'
access, as we are seeking to book additional capacity at various IPs in
Europe – which is often just not available (e.g. entry capacity from NL
to GER - we have committed firm bookings in open season process
and are concerned about potential delays of projects.)
DONG Naturgas There are still bottlenecks throughout the NWE region - some IC
points are booked more than 3 years ahead.
GasTerra B.V. No, for example we would like to have more export transport capacity
to Germany.
anonymous networkuser 2
20 What processes would you like to see in place to encourage
cross-border investment?
GDF Suez Yearly basis study at networks interconnection (level of booked
capacity, level of used capacity, level of requests not served)
Essent continue with third package proposals concerning ENTSOG en
regulatory cooperation.
POWEO See above.
GASELYS harmonisation and offer of bundled/combined capacity products
Coordinated capacity booking
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Merrill Lynch Commodities (Europe) Limited Proper investment tests
Better flexible allocation approaches
Incentive on TSOs
Proper risk sharing
Greater consultation; TSO incentives.
E.ON UK It may not always be possible to justify investments on the basis on
user commitments. Some investments of this kind may need to be
viewed as stratigic investments that go beyond the narrower interests
of the directly affected TSOs and particular users. As such they may
need to have retuns guaranteed by relevant regulators. By removing
key constraints it may be possible to link markets more efficiently and
encourage more wholesale market liquitiy to emerge at new or existing
trading hubs.
Centrica Plc Greater transparency of information (e.g. capacities, flows, aggregated
network demands), regulatory certainty over the framework for new
investment and regulatory oversight to ensure that TSOs (and indeed
regulators) are cooperating effectively on cross-border investment.
There needs to be a thorough, comprehensive review of TSO
incentives applicable to cross-border gas transportation – not just as
regards new investment but also in respect of other objectives such as
transparency and effective use of existing capacities. This issue could
be addressed by regulators in the GRI NW.
Vattenfall, Generation Nordic binding capacity ordering, but the price should be the actual one of the
year. This would avoid capacity being a commercial factor
On behalf of Shell Energy Europe Regular and coordinated open season processes (coordinated
between adjacent TSOs) with an acceptable timeline/schedule and
balanced risks between TSOs and shippers/traders.
DONG Naturgas Yearly market demand checks by TSO's equivalent to the first part of
an Open Season. Harmonization of Network Codes
GasTerra B.V. TSO’s should make overall planning for the grid that is in line with
other NW-European TSO’s.
Gaslink Independant System Operator Limited N/A as Gaslink is not a Network User
anonymous networkuser 2
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Questionnnaire on investments 2008 GRI northwest
Eneco Energy Trade Harmonisation of transport access rules, e.g. the various balancing
regimes
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Questionnnaire on investments 2008 GRI northwest
2a. Principle 1 by TSOs
21a Do you agree with this principle?
(n= 14)
IT problem. Therefore answer omitted. Response is manually
rechecked: respondents reactions still pending.
21b Why/why not?
GDF Suez Stability is nowadays impossible. Unilateral changes without third
parties' opinion and TSO's consent.
POWEO Stability and predictable climate are clearly important issues, both for
TSOs and shippers.
The third point is much more arguable, especially about the need to
attract capital. In a monopoly regime, TSO should have the obligation
to make investment. The best way to attract capital is to open capital
and perform unbundling of the TSO. The "fair" return will be provided
by possible new shareholders. With a dynamic capital, such
consideration is useless.
E.ON UK In the main yes but major problems and uncertainties exist in the GB
trasmission access regime which places unnecessary and in some
cases unmanageable risks on users.
Centrica Plc We agree that a sound investment climate must be stable, predictable
and fair. However, there may be cases where aspects of the regime
may legitimately need to change during the life of the investment (e.g.
a significant increase or reduction in the cost of external borrowing by
TSOs).
As regards the 3rd point proposed by TSOs, we suggest that the
following rider should be added:
“taking into account (inter alia) the level of user commitment provided
by potential capacity holders before the investment decision was
made”.
This is to reflect the inter-action between Principle 1 and Principle 2.
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Questionnnaire on investments 2008 GRI northwest
On behalf of Shell Energy Europe ORIGINAL QUESTION 21a:
Do you agree with this principle? Why/why not? What do you consider
to be a stable, predictable and fair framework?
FOR THIS QUESTION, OUR ANSWER IS "YES". Explanation:
From our point of view, TSO description of 'sound investment climate'
is almost adequate.
We would suggest changing the statement 'Important investment
parameters must be stable during the lifetime of new assets.' to
'Important investment parameters should be guaranteed for the
specific project, at least during depreciation period of the project.'
Reasons:
o Lifetime of assets might be unrealistic long time (e.g. 30 to 40
years). If emphasis is on financial parameters, 'stability' should be
guaranteed for period used in economic evaluations (depreciation
period could be an appropriate figure).
o Parameters and framework might change for future projects but stay
unchanged for dedicated project.
21c In your MS, who is responsible for addressing the above
principle and for considering its adequacy?
GDF Suez -
Essent regulator
GASELYS national and (central) regulators with the support of the EU parliament
Merrill Lynch Commodities (Europe) Limited The regulator
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E.ON UK In theory NGG in GB - however it is becoming progressively less clear
as the TSO is expected to increasingly rely on user commitments from
shippers to signal investment. It is not always possible for shippers to
provide the appropriate signals and this has result in late investment at
Easington despite the clear need for such investment. The risk that a
TSO will have revenue disallowed if he invests without adequate user
commitments means that they will invariably be conservative in their
invstment decsions - this can result in 'just in time' investment being
'just too late investment'
Centrica Plc Ofgem (in Great Britain).
Vattenfall, Generation Nordic the regulator and the market
On behalf of Shell Energy Europe For the sake of efficiency, MS representatives (and TSOs) of N/NW
countries should answer this question. Only if market participants
would disagree with the respective selection, further country specific
evaluation would be useful.
DONG Naturgas Danish Energy Regulatory Authority (DERA)
GasTerra B.V. No legislation yet. Tarification is pending.
Gaslink Independant System Operator Limited The NRA in conjunction with the TSO's
anonymous networkuser 2
21d What do you consider to be a stable, predictable and fair
framework?
GDF Suez No yearly changes. Mid-term explicit targets to reach.
Essent agree with above mentioned principles.
GASELYS Framework that are elaborated with all the business parties in full
transparency
In most of the current projects we got the feeling that TSOs don't take
into account business parties views despite large consultation.
Merrill Lynch Commodities (Europe) Limited One that is applicable to all parties not just the TSO, so it should
include transparency on the investment framework.
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E.ON UK Allowed revenues for a given investment plan should be agreed in
advance and revenues shall be guaranteed if at the ime the
investment was made a need for invstment could be demonstrated to
the relevant regulator (this criteria should not be dependant on user
commitments alone. TSOs should only be allowed on actual
investments made. Changes to investment plans reflecting changing
circumstances should be permitteed during the period of any plan.
This requires regulators to have sufficient technical as well as
econonomic expertise to enable them to challenge TSO plans and
determine whether investments have been efficienty incurred.
Centrica Plc We agree that a sound investment climate must be stable, predictable
and fair. However, there may be cases where aspects of the regime
may legitimately need to change during the life of the investment (e.g.
a significant increase or reduction in the cost of external borrowing by
TSOs).
As regards the 3rd point proposed by TSOs, we suggest that the
following rider should be added:
“taking into account (inter alia) the level of user commitment provided
by potential capacity holders before the investment decision was
made”.
This is to reflect the inter-action between Principle 1 and Principle 2.
N.V. Nederlandse Gasunie We fully agree with the views of the TSOs on this point and their
justification
On behalf of Shell Energy Europe See 21b
DONG Naturgas The Regulatory Framework should not change considerably in the
cause of the lifetime of a major investment. As a point of departure it
should be possible for a passive TSO investor to earn a return
comparable with alternative investments in other business sectors.
However, TSO's must also realize that they are now in open
competition with each other, wherefore they will need continously to be
competitive to be able to attract customers.
GasTerra B.V. Transparent long lasting legal framework, long term tarification
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Gaslink Independant System Operator Limited A system with appropriate Rates of Returns, no stranding of pre-
approved assets/investments. Ireland has these features at the
moment, but there are concerns regarding various initiatives affecting
the framework negatively. hence we are participating heavily in these
regional initiatives.
anonymous networkuser 2 Price settings should be transparent and predictable.
rTPA Exemptions should be aligned.
Operation procedures such as balancing, allocation, UIOLI-rules
should equally be formulated.
Users who book new capacities should not adversely be affected
opposed to those who have booked existing capacities (tariff
consistency etc.).
It should be predictable how to deal whth cross border capacity rights
and obligations in case of mergers and consolidations of market
areas.
Eneco Energy Trade The first two bullets in the first TSO principle sound reasonable. The
third is questionable. The principle of a fair risk/reward ratio for each
infrastructure project ignores the need for cross-subsidy in a monopoly
infrastructure.
NB: Some answers to 21b were omitted due to same problem as with
question 21a. The responses shall be manually checked.
22 Do rules that are stable during the life time of new assets
facilitate the development of increasingly dynamic competitive
markets? Yes or No. Please explain why Yes or No.
GDF Suez Yes. Helps new shippers to enter a market area.
Essent yes. TSO operate in a competitive environment as well and are
becoming more and more commercial regarding their investment
planning. therefore TSO most likely seek the same kind of certainty as
market parties that want to invest in assets.
GASELYS Yes because stability means clear view and expected situation in
terms of investment, raodmaps and expectations to have said planned
capacity/asset availability
Merrill Lynch Commodities (Europe) Limited There is a riks of creating legacy arrangements that protect rights for
some parties and not for new entrants.
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anonymous networkuser 1 No - a framework that allows change in a transparent, predictable way
with full open consultation provides the best opportunity.
E.ON UK Stability of rules are preferable once a viable set of rules are
established. There is alway a need for markets change processes
that permit changes to deal with changing circumstances.
Ideally the regulators should actively resist intervening and promoting
further changes once reasonably stable rules have been established.
The GB experience suggests that the reality is more likely to be
constant change to the regime driven by the regulator. Like all
bureacracies regulators do not plan their own demise and can always
justify their existance.
If the GB experience of ever intrusive regulation is to be reflected in
other MSs one can only assume regulatory uncertainties and risks will
grow rather than reduce over time.
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Questionnnaire on investments 2008 GRI northwest
Centrica Plc Yes, but some flexibility may need to be retained to change rules (as
mentioned above).
In some jurisdictions (such The Netherlands, re GTS), it should be
noted that gas transportation capacity fees are not fixed for the
duration of the relevant contract, but are determined on an annual
basis within the overall incentive framework approved by the national
energy regulator, Energiekamer.
From a network user’s point of view, this type of arrangement is clearly
less stable than a fixed capacity tariff, but may have advantages where
there is scope for material gains in efficiency leading to reduced
charges over time. In any event, this approach to transportation tariffs
requires a higher degree of long term stability, transparency and
predictability in the regulatory framework than one which is based on
contractually fixed or indexed charges.
GRTgaz The need is to guarantee a sufficient rate of return taking into account
the economical life of the infrastructure
Vattenfall, Generation Nordic No, rules might better be adapted to new circomstances - if aggreed
between the investors
On behalf of Shell Energy Europe Yes, but see comments above. We would propose a project-specific
continuity (stable rules for a dedicated project).
Investment projects are usually evaluated on the basis of set of
assumptions. The more risk these assumptions contain, the higher the
respective mitigation needs are (in terms of expected rate of return,
payout time etc).
DONG Naturgas New TSO assets are needed. Stable rules may attract investors - but
at the same time such rules may have a negative impact on the
competition i.e. hamper the possibility of changing imperfections.
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GasTerra B.V. Rules that are stable improve the investment climate and thus
stimulate growth of infrastructure which is one of the necessities to
create a more competitive market. The down-site is that infrastructure
will be used less efficient.
Gaslink Independant System Operator Limited Yes, if these rules are designed to create competitiveness in the
markets.
anonymous networkuser 2
Eneco Energy Trade Yes. Too little investment because of unstable rules will hamper those
dynamic competitive markets.
23 Do you consider there is room for improvement in the current
environment in terms of predictability, stability and fairness?
Please describe some instances where the regulatory
environment for investment may not be satisfactory in terms of
predictabil
Essent German example.
GASELYS Yes certainly there is room for improvements
In general what we experience is TSOs are designing their investment
plans, new TSCs... without taking account of the business parties
inputs and got the feeling that regulatory bodies have not a great deal
of influence. In fact we are still dtruggling with the same issues
Merrill Lynch Commodities (Europe) Limited Just about every open season in the recent past has been structured
as a contract with all of the rights given to the TSO. Shippers are often
asked to bid on non-flexible terms and make firm commitments without
knowing tariff levels.
anonymous networkuser 1 Room for improvement.
Improved governance, consultation and transparency on network
access, infrastructure investment planning and tariffication are all
necessary.
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E.ON UK Revenues and plans should always be agreed on an ex ante basis.
The scope for ex post adjustments should be limited to asking whether
investments were efficiently incurred (and certainly must excluding
regulatory perspectives arising from the benefit of hinddight).
Lack of coordination arising from specific and phylisophical
differences between regulators has arising with respect to the Irish
interconnectotr and the need to underwtie investment in the GB
system to ensure continuity of supplies to Ireland.
Key concerns with regard reforms to the gas exit regime in GB that
originated from Ofgem ignored the concerns of downstream Irish
stakeholders.
A challenge at the UK Competition Commission found that Ofgem did
not have to consider the cost and benefit consequences outside GB,
even other parts of the UK. The legal basis for this under English Law
and European law was dubious.
It does raise an important issue of principle however. Surely each
regulator in making decisions within its own juristiction should have
regard to and take account of the implications on other MSs and
stakeholders in those MSs.
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Centrica Plc As mentioned previously, the current disputes between the TSOs in
the Netherlands and Belgium and their relevant regulatory authority
and/or government over the tariff regimes for current and future
infrastructure has created considerable uncertainty for both the TSOs
concerned and network users.
To take a second example, the outcome of the ongoing EGT OS
process has been delayed by a number of months and is currently
rather difficult to predict, notwithstanding the binding commitments
made by potential network users. We also note that the basis for
future capacity charges (whether fixed contractually or to be set on an
annual basis within an incentive regulation framework) was unclear at
the binding bid date and remains so at the time of writing.
Regulatory oversight to ensure TSOs compliance with the GGP on
Open Seasons, would also contribute to an environment of
predictability, stability and fairness.
GRTgaz There is always room for improvement.
On behalf of Shell Energy Europe Question should be primarily answered by TSOs (especially if question
shall be answered against background of capacity investments in
interconnection facilities)
DONG Naturgas Examples:
German TSO's are just now being asked by BnetzA to calculate tariffs
according to cost-plus instead of benchmarking regime.
German Incentive Regulation seems focused on cutting tariffs in a
rather complicated and unclear way, which creates great uncertainty
by investors for the profitability of individual business cases.
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GasTerra B.V. Yes, for example the division between new and old investments is not
clear, but legislation is still pending in the Netherlands (as is
tarification).
Gaslink Independant System Operator Limited Any improvement that would lead to the abolishment of Regulatory
opportunism would be welcome.
anonymous networkuser 2
Eneco Energy Trade see 21d
24 Do the above 3 bullets address the objectives of a sound
regional investment climate (from various stakeholder
perspectives)?
(n= 10)
Yes 50.0%
No 50.0%
If not, please advise alternative approaches that might address
the objectives?
POWEO Clear definition of Asset Base /risky assets has to be harmonized at an
European level.
This will help TSOs for any new investment.
Merrill Lynch Commodities (Europe) Limited No mention of the shippers and consumers. The starting point should
be an appropriate sharing of risk given the level of regulated returns.
anonymous networkuser 1 The bullets represent only a part of what is necessary. A sound
investment climate is not guaranteed.
Centrica Plc Answer given is NO, because we would like to comment.
Generally yes, but with two provisos:
1.As mentioned above, some flexibility may need to be retained to
change rules.
2.The principles do not adequately address the mix between
regulatory and contractual (user commitment) framework and the need
to ensure that allowed returns are reasonable in view of the risks
transferred to network users and/or end consumers.
GasTerra B.V. Clear long lasting legal framework and long term tarification.
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25 How does this principle affect network access tariffs?
GDF Suez Multiplied changes cost money to adapt one's tools/organization...
Essent tariff setting is essential for TSO in order to determine their investment
risk.
POWEO There is no real need of any long term predictibility in tariffs, as the
regulator check at all time that the tariffs are defined on a cost-plus
basis.
But it is clear that there is a need for new investment with, maybe,
some increase in tariffs. This is the condition to improve competition.
GASELYS fair, shorter terms plans, better predictability, rational decision on
additional capacity building after efficient analysis... should lead to
better Network access tariffs elaboration.
Merrill Lynch Commodities (Europe) Limited There will be an incentive to keep tariffs high, and not to sell short term
services for economic value. Where the economic value is less than
the (multiple) of the regulated tariff shippers will not by capacity and
the system is not being used efficiently.
anonymous networkuser 1 Tariff methodologies, and actual tariff predictability are both essential.
Note that a clear methodology does not guarantee predictability
without transparency on other issues including planned and actual
capex and opex.
E.ON UK The 3 bullets in my view decribe a regime that assures particular
returns. Network access tariffs must by definition be set to recovered
those returns. Auction based mechanism for the recovery of revenues
will always over or under recover and lead to volatile and
unpredictable tariffs.
We think there is is a place for locational charges based on LRMC
principles but we would not advocate the fundamentally flawed auction
based arrangements for access that apply in GB. Having said that
there may be a role for auctions to allocate scarce short-term
interruptible or use-it-or-lose-it entry/exit access rights. Auctions
should certainly not be used as the primary mechansm to recover
allowed revenues.
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Centrica Plc In general it should make at least the capacity element of network
access tariffs more predictable. It is difficult for network users to make
long term capacity commitments without the information needed to
take a reasonable view of what they can expect to pay for it.
On behalf of Shell Energy Europe Minor influence if no structural change is planned.
DONG Naturgas Must be analysed further in detail.
GasTerra B.V. Should be based on long term tarification.
Gaslink Independant System Operator Limited Under this pricinple, tarrifs would be stable, predictable and fair.
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2b. Principle 2 by TSOs
26a Do you agree with this principle?
(n= 18)
Yes 72.2%
No 27.8%
26b Why/why not?
GDF Suez Not all stakeholders can allow heavy binding commitments. can be
beared only by important groups.
Essent investments in capacity are only possible if there is sufficient demand
and regulatory certainty.
POWEO Market (shippers) are supporting most of new investements.
GASELYS All parties with expertise of the market development must be involved
Merrill Lynch Commodities (Europe) Limited This seems to be a trade off for regulating the returns. But it should
also say 'for a given level of risk'
anonymous networkuser 1 TSOs should be exposed to some level of risk in return for the
potential for upside.
E.ON UK Yes but undue reliance on user commitments from the market may not
be approriate in many instances,
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Centrica Plc Under Article 8 of the current Gas Directive 2003/55/EC, TSOs have a
duty to maintain and develop their system. There may be some cases
where infrastructure investments have a benefit for the whole network
and the recovery of these investments should be socialised across
network users as a whole. In such cases, after consultation with
stakeholders, the regulator should approve the addition of the
investment to the TSO’s asset base.
However, for most major cross-border infrastructure investments
leading to new pipeline capacity it would be reasonable for the TSO to
require sufficient binding commitments from the market to underpin
such and investment.
We note that there are significant differences between TSOs in the
currently applicable “user commitment” regime and the reasons for
such differences are not fully clear. In our view, they must be
sufficient to underpin investment, but neither unduly onerous (in which
case the level of investment could be sub-optimal) not unduly
restrictive of competition.
GRTgaz Binding commitments is necessary to garantee the need and limit the
financial risk for the investors.
N.V. Nederlandse Gasunie See justification of TSOs
Vattenfall, Generation Nordic These are the partners to agree on commitments
On behalf of Shell Energy Europe We tend to agree, but would prefer to involve governments even more.
We would suggest removing the word 'possibly' in the sentence
above.
The reasons are mentioned in answers already given (preference for a
level playing field all over Europe) – and discussions in several
ERGEG GRI projects: Regulators and TSOs quite often had to realize
that some of the proposals to improve interoperability/ capacity usage
are not compliant with national legal framework, which often cannot be
changed by regulator. These ideas require action of the governments.
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DONG Naturgas With the view that TSO's must be profitable as individual stand-alone
businesses, they will try to minimize investment risks as any other
business. Therefore they will like to recover their costs as quickly as
possible and to minimize the risk of sunk costs.
GasTerra B.V. Yes, but based on a clear long lasting regulatory and legal framework
Gaslink Independant System Operator Limited Binding commitments are core to a sound investment climate, as they
help to remove the financial risks associated with major investment
projects.
anonymous networkuser 2
Eneco Energy Trade Investments cannot be done without binding commitments. However,
binding commitments should not only arise from a TSO initiative (e.g.
open season), but also from capacity requests from the market.
27 How can underpinning an investment from the market be
obtained: Long-term / short-term contracts? What is the correct
balance between short-term/long-term commitments, in view of
facilitating competition and security of supply? Please give, if
possibl
Mid-term Gas releases to open market areas and needed capacity
acquired in accordance to allocation combined with 70-80% of long
term commtimement and 20-30% of short term commtiment
Essent only long term contracts shut off market access for new entrants,
therefore a transparent and fair allocation method should be applied
that all parties are in the position to get access. short term contracts
form part of this.
POWEO Some long term contracts could be envisaged but the commitment is
taken mainly by the regulator, in giving an approval to include
investment in the asset base.
Long term contracts should actually be a requirement from the
regulator, to check the accuracy of this investement. A 70% LT/30%
CT or 80/20 seems fair, with in that case 100% include in the asset
base, with a tariff calculated on 100% of the capacity and evoluting if
short-term booking fails.
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GASELYS Markets and liquidity development need more short/mid term visibility
so short-term commitments are much more favoured. LT
commitments can only benefit to incumbents who have minor interest
in liquidity development
Merrill Lynch Commodities (Europe) Limited Contract lengths should be variable, so this requires an investment
model that recognises that 100% funding with long term contracts is
not necessary.
UK arrangements has allowed investment to occur based on shipper
demand.
anonymous networkuser 1 A mix of LT, ST and rolling into the general RAB.
E.ON UK If revenues are underpinned by regulatory commitments, user
commitments from the market are then only required for new
investment.
Users e.g. new power station need only provide a commitment
sufficiently large to ensure the project is specultive. This might
amount to some 2 to 3 million Euros for a 500MWe station hich might
typically be equivalent to 1 years exit capacity charges. This
commitment provides sufficient safeguards to ensure any investment
by the TSO is not stranded. This leval of commitment has proved to
be successful in the UK.
There is a dannger that if too long or too large a finacial commitment is
asked this could act as a mjor barrier to new entrants to the market.
The acid test is to ensure that any financial commitments made are
sufficient to dissuade speculative investments.
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Centrica Plc It would be reasonable for TSOs to require the majority of the
investment to be underpinned by long-term contracts. In this case
long-term could be considered any period in excess of 5 years. In
practice, many OS processes require much longer term commitments
and some include capacity allocation (prioritisation) rules which
effectively exclude shorter term transportation contracts.
In Great Britain for network entry capacity users are required to make
commitments equivalent to 50% of the incremental investment cost
over a period of 8 years.
On the Continent, user commitment periods are typically much longer,
though some (such as EGT) reserve a portion of total new capacity for
shorter duration contracts. In our view, it is desirable to do so where
the “normal” user commitment is very long (say, 10-20 years) and a
short term contract reservation can be made without undermining the
overall investment case from a TSO perspective.
On behalf of Shell Energy Europe From our perspective, long-term contracts are essentially a risk
management tool. They exist to limit the risk for an investor but also to
provide security of supply and thus mitigate the risk of disruption to
energy supplies.
DONG Naturgas In the ideal world capacities should be available throughout the region
at all times. However, such a scheme will require "oversized"
pipelines. The questions then is how much is the market prepared to
pay for capacities, which may be idle most of the time. This questions
could be discussed in an ERGEG coordination group. The questions
about long-term/short-term contracts may not be so important if UIOLI
rules are changed enabling an actual release to the market in due time
of ununsed capacities.
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GasTerra B.V. Both, with price discrimination between short term and long term
contracts.
Where long term investments are not underpinned by revenues from
market parties, benefits for society should be considered and if these
are high enough, governments should invest.
Gaslink Independant System Operator Limited Large infrastructure investment projects NEED long term
commitments to ensure they are practical and viable.
Eneco Energy Trade Depends on specific investment.
28 In your MS, who is responsible for addressing the above
principle and for considering its adequacy? How would you
define binding commitments from the regulators and the
government? By what means do regulators and governments
commit in your MS?
GDF Suez -
Essent both regulator and ministry of economic affairs.
GASELYS Not sure
Think this is The CRE regulator
Merrill Lynch Commodities (Europe) Limited The regulator is responsible. Binding commitments come in the form
of rates of return, and incentive arrangements. More often the funding
commitment is a broader agreement dealing with total funding, debt
levels and credit ratings
E.ON UK Binding commitments should relate to a specific investment plan
and/or agreed level of physical capacity provision. Governments
migh ultimatley have to underwrite certain strategic investments where
a conventional business case may not justify a particular project,
e.g.strategic storage,
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Centrica Plc In Great Britain, Ofgem Is the responsible authority and it recognises
the importance of consistency, transparency and a stable regime to
support investment.
We would not expect the GB regulator or UK government to finance
capacity. The cost of new investment is recovered from network
users, via a mixture of specific user commitment and more general
regulatory arrangements - both Transmission Operator (TO) price
control regulation and the System Operator (SO) incentives.
On behalf of Shell Energy Europe For the sake of efficiency, MS representatives of N/NW countries
should answer this question. Only if market participants would
disagree with the respective selection, further country specific
evaluation would be useful.
DONG Naturgas Danish Energy Regulatory Authority (DERA)
GasTerra B.V. Responsibility still not clear.
Gaslink Independant System Operator Limited The local Regulator is responsible, in conjunction with the government,
for ensuring the adequacy of the commitment model in the Republic Of
Ireland.
29 Which other mechanisms are appropriate to recover costs for
TSOs?
GDF Suez Generated cash flow partially dedicated for others investments, or to
cover less binding commitments
Essent no comment
POWEO compensation mechanism (fine-tuning of the tariff) if real booking are
different than foreseen ones.
GASELYS None
Merrill Lynch Commodities (Europe) Limited Capacity costs could be recovered through capacity sales and a
balancing charge. Operational costs should be recovered by a
separate charge.
anonymous networkuser 1 Rolling into the cost base; charges based on factors other than
capacity e.g. commodity, site/meter etc.
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Questionnnaire on investments 2008 GRI northwest
E.ON UK Not sure if question applies to storage operators as well. It is perfectly
posssible under the right market conditions (as in the GB) for storage
operators to rely entirely on the market to provide returns or not
Centrica Plc As mentioned above, we strongly advocate proper consideration of
“SO” type incentives at a regional level, alongside the framework of
user commitments and the regulation of TO charges.
For example, TSOs should be given incentives to maximise the use of
capacity. This could include methods such as “capacity buybacks”.
There needs to be a proper balance of incentives on TSOs to balance
investment in new capacity, release of existing capacity (whether firm
or interruptible) and the facilitation of secondary markets. Regulators
need to be aware that the current incentive framework can lead one or
more of these aspects to be favoured, to the exclusion (or only limited
implementation) of the others.
DONG Naturgas Shorter time of depreciation.
Gaslink Independant System Operator Limited Long term financial security commitments and commitments to
underwrite assets.
30 What would you, as a stakeholder, prefer as a means of
underpinning an investment?
GDF Suez Longer period of investment returns
Essent long term guarantees by regulator.
POWEO Regulators approving investment with transfer into asset base.
GASELYS consultation and vote
Merrill Lynch Commodities (Europe) Limited Agreement on the level of risk to be faced by TSO, consumers and
shippers then an investment model, and where necessary additional
system charges to ensure funding is provided as agreed is capacity
sales are insufficient.
anonymous networkuser 1 Mix of LT commitment, rolled into cost base and TSO risk.
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E.ON UK Binding commitments by the relevant national regulator(s) should
underpin new investments.
Investments plans should largely be driven by central planning
processes by relevant TSOs.
However, investments must be efficienty incurred and a degree of
user commitment may have a part to play in this but undue or excess
user commitments will act as a barrier to market entry and for
established users can act as a barrier to exit.
In this regard the shift to longer user commitments in the GB has
proved to be detrimental and seems to go against creating an
environment that conducive competitive wholesale markets
Centrica Plc We support binding multi-annual “user commitments” by stakeholders,
provided that (a) the basis for this commitment is
transparent/predictable and (b) an excessively long minimum period is
not applied.
On behalf of Shell Energy Europe As long as appropriate level of investments by TSOs and access to
capacity is guaranteed whenever needed, we would have no
dedicated preferences.
DONG Naturgas Yearly Open Seasons.
GasTerra B.V. Economics (business as well as benefits for society).
Gaslink Independant System Operator Limited Long term commitments over either the useful of technical lifetime of
the assets, in conjunction with an appropriate rate of return.
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2c. Principle 3 by TSOs
31a Do you agree with this principle?
(n= 17)
Yes 88.2%
No 11.8%
31b Why/why not?
GDF Suez -
Essent see previous answers
GASELYS Assuming that efficient analysis of the need has been carried out, final
decision on cross-border investments should involve all concerned
parties who should foster such projects
Merrill Lynch Commodities (Europe) Limited Such investments can not be done unilateraly.
anonymous networkuser 1 There is no reason why TSOs could not be separately incentivised to
construct capacity on either side of the border.
N.V. Nederlandse Gasunie See justification of TSOs
Vattenfall, Generation Nordic The approach by regulators, TSOs and governments should be
regional meaning across national boaders and not national combined
with improved cooperation across boarders. natural Gas business is
international and trade should not be limited by national boarders.
Gaslink Independant System Operator Limited This principle is key to the success of interconnector investment
projects, where cooperation is essential between the various
regulators/TSO's.
anonymous networkuser 2 We absolutely agree on this, because only a harmonised environment
incentivises TSO's to co-operate and coordinate their respective
investment programmes, what in turn helps shippers to enter into
commitments. Recent open seasons such as those between Fluxys
and GRTgaz are positive examples.
31c In your MS, who is responsible for addressing the above
principle and for considering its adequacy?
GDF Suez -
Essent regulator and legislator
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Questionnnaire on investments 2008 GRI northwest
GASELYS don't know exactly
CRE ??
Merrill Lynch Commodities (Europe) Limited The Regulator
E.ON UK Ofgem
Centrica Plc Ofgem and National Grid Gas. (However, the nature of this principle is
that is cannot be achieved by one set of national actors alone.)
Vattenfall, Generation Nordic the regulator and the market
On behalf of Shell Energy Europe For the sake of efficiency, MS representatives (and TSOs) of N/NW
countries should answer this question. Only if market participants
would disagree with the respective selection, further country specific
evaluation would be useful.
DONG Naturgas Danish Energy Regulatory Authority (DERA)
GasTerra B.V. not clear
Gaslink Independant System Operator Limited Regulator and TSO's
32 Please give examples of when the differences in the allocation
of regulatory roles and responsibilities (e.g. between regulatory
agencies and governments) have hampered cross-border
investments?
GDF Suez Different operational rules or operational untis between TSOs due to
legal enforcement or regulatory rules that empeach harmonization
GASELYS not known
Merrill Lynch Commodities (Europe) Limited Fluxys open season delivery was hampered by a lack of alignment
with connected networks. There didn't seem to be any regulatory
oversight to help manage the process.
Centrica Plc In both the Netherlands and Belgium, where tariff disputes have
delayed cross-border investment, the shared role that the government
and regulator have in approving tariffs has contributed to the delay.
It is not entirely clear on which basis incremental BBL forward flow
capacity and any reverse flow service (whether physical or virtual) is
being regulated, as between Ofgem and the Energiekamer.
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GRTgaz Rules between the countries are often different and sometimes non
compatible. For example, There are differences on capacity allocation
rules (first come - first served / prorating), on the parts of the capacity
dedicated to short term booking, etc.
Vattenfall, Generation Nordic Capacity problems at Ellund is still unsolved
GasTerra B.V. Occasionally import capacity for the Netherlands is build, our demand
for export capacity to Germany has not been taken into consideration
yet.
Gaslink Independant System Operator Limited Not applicable as this has not been an issue for us in the past. There
has been very successful cross-border investments made in the past,
even when faced with differing roles and responsibilities of the
Regulators.
33 Does the difference between how TSOs are regulated in
different MS create a barrier to investment? Please give specific
examples in your responses.
(n= 14)
Yes 78.6%
No 21.4%
34 On which aspects could coordination be improved, e.g.
allocation rules, transmission services, regulatory parameters?
GDF Suez Standard gas day - Operational unit (MWh 25°C/Sm3/Nm3...) -
Allocated as nominated
Essent tariff setting
POWEO Allocation rules is a key principle in developping capacity, at least until
a liquid secondary market appears.
GASELYS harmonisation on all aspects of the cross-border processing, ie
balancing, scheduling, allocation, bookings
Merrill Lynch Commodities (Europe) Limited Incentives to invest
Allocation approaches in terms of methods and timing
E.ON UK harmonisation of services and obligations wherever possible. Whre
differences exist these should be objectively justified.
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Centrica Plc The timetables for key commercial dates and regulatory approvals in
each Member State need to be aligned. This should take into any
contentious national regulatory issues that could affect one of the
TSOs investment decisions.
The rules for allocation of capacity, especially in the case of
oversubscription, should be published and approved by the regulatory
authority in advanced. Allocation rules need to be sufficiently
coordinated between co-ordinated between TSOs to allow for
contracting shippers to match their final capacity bookings at the
relevant interconnection points.
Vattenfall, Generation Nordic The governments and the regulators should focus on the regional
markets across national boarders with the adequate regulation on EU
level.
On behalf of Shell Energy Europe We fully support comment/note by RCC ('relevance to this principle
prior to implementation of the 3rd package').
Which also means: Priority should be given to full and equal
implementation of the 2nd Gas Directive in every country.
DONG Naturgas Allocation should be based on transparency and joint Open Season
(simultaneouly) - not FCFS. Short-term capacities to be sold at
auctions. Shippers to buy same capacity entry/exit at cross border
points.
GasTerra B.V. Overall framework is missing.
Gaslink Independant System Operator Limited Similar regulatory arrangements within regions could be a great
benefit, and this is certainly one ultimate goal of the NW-GRI/ERGEG
initiatives. In addition, similar transportation arrangements between
neighbouring systems could help.
anonymous networkuser 2
35 Do you have any specific suggestions or examples as to how
coordination could be improved between regulatory authorities
and TSOs in different sides of cross-border investment point?
GDF Suez Coordination of Open Season (planning - technical possibilies on both
sides of the border to be equal)
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Essent Guidelines for open season should become binding and more detailed
so that there can be less discussion on details.
POWEO Instead of making Open Season on a full network basis, capacity
should be developped by interconnection point, with a clear project
leader requesting commitments for shippers on such interconnection.
This is the only efficient way to develop any cross-border entry-exit
capacity.
GASELYS regulatory authorities and TSOs should work with business parties on
a harmonisation package leading to TSOs contracting the same rules
anywhere and offering combined products
Merrill Lynch Commodities (Europe) Limited For large projects there may need to be a coordination group.
For regular system enhancement, well structured rules and processes
should be sufficient.
E.ON UK Much needed at the Irish Interconnectors. Regulators should be
required to consider the implications of downstream
regulators/stakeholders in their decisions
Centrica Plc The regulatory authorities and TSOs are best placed to comment on
this. However, information on how coordination will be carried out and
the key dates should be made known to shippers on a timely basis.
Vattenfall, Generation Nordic Some times regulators have more national than international interests.
On behalf of Shell Energy Europe The recently announced plan of GTS and Gasunie D to carry out an
integrated open season process is a very good example how situation
could be improved.
DONG Naturgas Regulatory Authorities and TSO's should be requested to report
specifically on their active involvement in improving cross border trade
in their respective Annual Reports.
GasTerra B.V. Create an overall framework.
Gaslink Independant System Operator Limited Through initiatives like NW-GRI, GTE+, CAG (the all-Island Gas
Market in Ireland) etc.
anonymous networkuser 2
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Questionnnaire on investments 2008 GRI northwest
2d. Principle 4 by TSOs
36a Do you agree with this principle?
(n= 17)
Yes 94.1%
No 5.9%
36b Why/why not?
GDF Suez If not, leads to a dead-end process to take any decision
Essent important for quick decision making and realisation of new
investments.
POWEO Before any open Season process, a first round table has to be made
between TSOs, regulators and European autorithies to insure of the
success of such process.
There should be a tacite on basic principles before any request to the
market and consultation on this principles with this market before such
process.
Timing, regulatory framework are key elements.
GASELYS this is a pre requisite
Merrill Lynch Commodities (Europe) Limited A clear understanding of the investment environment is the key
element for creating certainty and transparency. There is little
evidence of this in most markets.
E.ON UK Yes but proper checks and balances in any regime requires active
involvement of users in policy formulation, design of services etc.
Care must be taken to ensure that the regulators do not dictate policy
as workable practical solution are best orignated from TSO and their
users. Decision on most practical and operational matters must
remain with the TSOs. TSOs are not simply there to implement the
policy choices of regulators.
Centrica Plc Clarity of roles and responsiblities is important.
GRTgaz The systems are often The systems are often different between the
countries. This principle is useful for facilitating the exchanges and
improving coordination.
N.V. Nederlandse Gasunie See justification of TSOs
Vattenfall, Generation Nordic There is a need for a regional European approach
GasTerra B.V. Yes, but this is needed for the whole market, not only for TSOs.
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Gaslink Independant System Operator Limited Clarity on roles and responsibilities is important for TSO's and all
market participants to ensure that the correct processes are adhered
to by all participants, that it is clear who is responsibile for what
elements of the decision process, that final decision makers are
known in advance, that decisions/commitments made within each
organisation are binding and lasting etc etc.
anonymous networkuser 2
37 In your MS, who is responsible for addressing the above
principle and for considering its adequacy?
GDF Suez -
Essent regulator and legislator.
GASELYS ?
Merrill Lynch Commodities (Europe) Limited The Regulator
E.ON UK Ofgem
Centrica Plc The responsibilities of stakeholders and regulatory authorities are
clearly set out in national legislation and the network code
Vattenfall, Generation Nordic The regulator and the market
DONG Naturgas Danish Energy Regulatory Authority (DERA)
GasTerra B.V. Unclear division between policy and implementation.
Gaslink Independant System Operator Limited The regulator, in conjunction with the TSO's and government.
38 Are you clear on the division/definition of roles within your
country(ies) of operation and how the roles and responsibilities
are divided? Please provide separate answers per country of
operation, where relevant.
GDF Suez All mentionned countries present difficulty in roles definition.
Essent yes.
GASELYS No this is not clear
Merrill Lynch Commodities (Europe) Limited In the UK this is reasonably clear.
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E.ON UK The roles of TSOs and the market have progressively become blurred
in GB. Complex and opaque incentive schemes have commercially
incentivised how NGG releases capacity into the market place. It is
our view that TSO are the playing field on which the market participant
play. Their role in the market should ideally be kept as residual as
possible. Under most circumstances TSOs should be viewed as
regulated monopolies - if they are allowed to play too nmuch in
capacity or energy markets wholesale markets those markets can get
distorted.
Centrica Plc In the other NW region countries where we are active (Belgium, The
Netherlands and Germany) the division of roles is often less clear.
However, we believe that if national regulators had more power to
make decisions on and oversee the cross-border investment process
and national tariff methodology, this would help streamline the process
and facilitate coordination.
On behalf of Shell Energy Europe Yes for N/NW.
DONG Naturgas Yes
GasTerra B.V. No. In Netherlands regulatory framework is still pending (for example
unclear division between regulated versus non-regulated business).
Gaslink Independant System Operator Limited Yes.
If you have any other remarks or suggestions regarding
investment, we would appreciate it very much if you let us know:
Essent we are happy to further elaborate on our answers any time.
anonymous networkuser 1 I would ask that this response is only published on an anonymous and
unattributable basis, or is not published at all.
E.ON UK Give TSOs adequate guarantees re returns/allowed revenues and
they will be more than happy to faciltate non discriminatory TPA
access and wholesale market competition. Ulimately assurance on
the allowed returns is the only negotiation that matters for monopoly
TSO businesses.
GRTgaz We hope that this process will improve the regional investment
climate. GRTgaz is willing to contribute to this improvement.
Gaslink Independant System Operator Limited No remarks.
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anonymous networkuser 2
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